Pendency of Appeal Against Resolution Plan Bars Shifting of Registered Office Under Rule 30(9) Proviso.

Following the approval of a resolution plan for Hindusthan National Glass and Industries Limited (HNGIL) under the IBC, the successful Resolution Applicant (Respondent No. 4) applied to the Regional Director (RD) to shift HNGIL's registered office from West Bengal to Maharashtra.

Despite the pendency of 24 appeals against the resolution plan before the NCLAT, the RD allowed the shifting, reasoning that Section 238 of the IBC overrode procedural bars and that the move was necessary for "clean slate" revival.

The Appellants, post-CIRP creditors claiming interest dues under the MSMED Act, challenged the RD’s order in a writ petition.

A learned Single Judge dismissed the petition, holding that the shifting caused no prejudice to creditors and that the RD acted in line with NCLAT observations.

The Appellants then filed this intra-court appeal.

1. Whether the pendency of an appeal against a resolution plan constitutes a mandatory statutory bar to shifting a company's registered office under Rule 30(9) of the Companies (Incorporation) Rules, 2014.

2. Whether the "clean slate" theory and Section 238 of the IBC override the specific restrictions on shifting registered offices contained in the Companies Act and its Rules.

The court applied Section 13(4) of the Companies Act, 2013, which mandates Central Government approval for shifting a registered office.

Rule 30(9) of the Companies (Incorporation) Rules, 2014 (as amended in 2023), specifically the second proviso, which stipulates that shifting "may be allowed" where a resolution plan is approved provided "no appeal against the resolution plan is pending in any Court or Tribunal".

The court distinguished Section 238 of the IBC, noting it only overrides laws "inconsistent" with the Code.

Delegated legislation (Rules) is binding on statutory authorities and cannot be circumvented by importing provisions from unrelated statutes.

The Court found that the Regional Director (RD) committed a jurisdictional error by ignoring the plain language of the second proviso to Rule 30(9).

The Court clarified that the word "and" in the proviso acts as a disjunction, meaning shifting is barred if either an appeal is pending or an investigation is ongoing.

The RD’s reliance on Section 238 of the IBC was misplaced because there is no inconsistency between the IBC and the Companies Rules regarding the procedure for shifting an office; the IBC is silent on office relocation, leaving the field to the 2013 Act.

The Court further noted that the resolution plan itself did not mandate immediate shifting, but rather restricted it until management was taken over.

The "prejudice test" applied by the Single Judge was rejected as irrelevant when a statutory authority acts in excess of its jurisdiction against a specific legal bar.

The High Court allowed the appeal and set aside the orders of the learned Single Judge and the Regional Director, ordering the application for shifting to be kept in abeyance until the legal embargo under Rule 30(9) ceases to exist.

All connected applications were disposed of.